In Australia, it is possible to be compensated by your insurer even if the insurance policy does not strictly cover the relevant incident. In a recent matter handled by Brightstone Legal, we had successfully convinced an insurance company to give a half-a-million-dollar pay-out as a result of an accidental fire that had burnt down an entire residential house despite the fire having been expressly excluded by the insurance policy.


Our client is a registered proprietor and owner of a house in an inner west suburb.

For the past 11 years, he had religiously paid for his insurance policy, which specifically provided insurance coverage of up to $650,000.00 in the event of the house being burnt down by accidental fire.

In mid-2017, a tenant of our client accidentally set our client’s house on fire when her mobile phone charger caught fire. His house was burnt to a crisp.

The insurer had irrevocably rejected the payout on the basis that the insurance policy only covered his house when sued for residential purposes (as expressly set out by the insurance policy) – by renting the house out to multiple tenants, our client had been deemed to have used it as a boarding house and was therefore not eligible to be compensated.

Our argument

We eventually took carriage of the matter and pursued our client’s rights pursuant to the 澳大利亚《联邦保险合同立法》 (Cth). The legislation is a piece of wonder the conception of which was christened by one of the most eminent albeit thought-provoking High Court Justice, the Hon Michael Kirby AC CMG.

Specifically, section 54 of the 澳大利亚《联邦保险合同立法》 (Cth) sets out the following:

Section 54 Insurer may not refuse to pay claims in certain circumstances

(1)  Subject to this section, where the effect of a contract of insurance would, but for this section, be that the insurer may refuse to pay a claim, either in whole or in part, by reason of some act of the insured or of some other person, being an act that occurred after the contract was entered into but not being an act in respect of which subsection (2) applies, the insurer may not refuse to pay the claim by reason only of that act but the insurer’s liability in respect of the claim is reduced by the amount that fairly represents the extent to which the insurer’s interests were prejudiced as a result of that act.

The effect of the provision essentially means that insurance policy terms are not strictly adhered to and may be disputed if the insurer’s non-payment would lead to an unfair result. In the premises and through aggressive negotiations conducted by us, the insurer eventually agreed to pay out $500,000.00 to our client.

If you have any insurance related enquiries, please contact us using the information below to book a consultation with us.